Samsung vs. Apple: Battle for smartphone supremacy

Samsung (005930.KS) and Android operating systems are dominating the global smartphone market share. How critical is 2023 for the smartphone market overall, and is it a make or break year for Apple (AAPL)? IDC Research Director Nabila Popal, ABI Research Research Director David McQueen, and Yahoo Finance tech editor Dan Howley join the Live show to discuss the state of the smartphone market, including the outlook for Apple and Samsung.

IDC Research Director Nabila Popal does not foresee anything stopping the dominance of Apple, particularly in the premium smartphone market. Popal said, "Because of the declining market and ongoing success of Apple, it continues to dominate, at least the premium market."

ABI Research Research Director David McQueen expressed his opinion on the Galaxy Z Fold 5 and Galaxy Z Flip 5 and whether it will help Samsung in the premium smartphone market. McQueen explained, "This is fifth generation now ... it's not really reached out as far and as wide as expected ... it's clearly not resonating as well with the higher-end user."

Read more about how Samsung’s foldables are coming for Apple’s iPhones here.

Dan Howley traveled to Samsung’s facilities in South Korea as part of Yahoo Finance's NEXT.

NEXT is a groundbreaking series that will offer a glimpse into some of the biggest companies Yahoo Finance covers every day and learn just what they’re planning for the future and what it means for your investing portfolio. You can watch the premiere NEXT episode on YouTube, and be sure to follow us there.

For more on our NEXT Series, click here, and tune in to Yahoo Finance every Monday at 10 a.m. ET.

Video Transcript

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DAN HOWLEY: The global smartphone market is struggling. According to IDC, mobile phone tracker shipments are expected to fall by 4.7% year over year during 2023-- the lowest volume in a decade. But as shipments fall, Apple's share of the market creeps up, expected to hit its highest level in the global market share ever of 19.9% this year. Still, Android operating systems and Samsung's phones, they're dominating on a global level.

And when you think about 2023 and how critical of a moment this is for all of the smartphone market, but especially for a company in Apple, is this make or break.

NABILA POPAL: Our data is showing how because of the declining market and ongoing success of Apple, it continues to dominate at least the premium market. And this year will be the year where it reaches its peak share of 20% annually, which is which hasn't happened before.

JULIE HYMAN: David, let's talk about the foldable, shall we? Obviously, Samsung has put a lot of resources into this, betting that it is going to gain share because not that many people have foldable phones of the overall total. Is that the right strategy to take and is that going to help it edge out Apple?

DAVID MCQUEEN: The difference in a device that's just a block-- otherwise just a block piece of glass. Having foldable in there makes perfect sense. And its high price, though, it's competing at the high end. It has to really at the moment. I mean, some have tried to get that pricing down, they [INAUDIBLE], particularly in some of the Chinese vendors, very difficult.

So I can see why Samsung are doing that. But that's as you saw in the montage there, this is fifth generation now. And it's still-- our numbers show probably less than 2% of the overall smartphone market. So it's not really reached out as far and as wide as expected actually. And Samsung although leading I think 80 plus percent of the foldable market, it's clearly not resonating as well with the higher end user.

And perhaps as well, in a COVID, probably didn't help because it's very tactile experience, as you found when you get to use one. You got to go and use it and touch it. And why do I need one of these when I've got my other piece of glass.

So I can see why they're going that way because they want to differentiate their products at the higher end. And when they're competing with Apple who don't have one of those devices at the moment. But it's-- yeah, it's a challenge. And, you know, those crates in the screen and the hinge-- the hinge, the amount of design that goes into that hinge is unbelievable.

And they're still quite-- still quite thick. That's why I quite like the flip as more and more than the fold actually. But anyway, so yeah, I think that doing the right things by pushing foldables. But whether they need Apple in there to really spark in that market to really get it going because so many have tried. It remains to be seen.

DAN HOWLEY: Nabila, I want to ask you about why we're seeing Apple's market share creep up, right? This is according to IDC's numbers-- one of the worst smartphone markets in decades.

Is it just because they're playing in the premium segment? Is it that they're able to then push out and I guess attract customers who are more interested in that? Is it because of upgrade cycles? Is it the iPhone 15 or presumably what's to be the 15? What is the reason that Apple is kind of pulling away like this?

NABILA POPAL: So, you know, you've hit on so many points there. So if you think about the whole smartphone market, right, let's just go top down. The entire market has been in decline since 2017 really, with the exception of 2021, we've been in six, seven consecutive years of decline.

And while this is declining, the premium share has been going up. So from, let's look at prepandemic and post, right? Prepandemic premium phones, which we classify as $800 plus have gone from 10% share of the market to 20% now for the first half of '23. And lot of premium supersize. 71% of premium market is Apple. And that shows you the chart right there shows a trend that since 2019, Apple had only 63% share. And you can see Samsung was close to 30%.

Samsung struggled with maintaining and that's really been their effort the last five years or so is to gain share with Apple in the premium segment. And that's as you can see their share dipped as low as 15%. And that's right about when they dropped the note. But in the last couple of years, they have quickly recouped 7 points of that share reaching about 22% now.

So it's really neck to neck. I think five years ago, you would say there was another third player viable, but now it's really an Apple and Samsung market. And this is your pain point because that's where the dollars are, right, premium devices $800 and above.

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